Goal of Full Employment

• Goal of Full Employment?

  To achieve the lowest rate of unemployment without creating unacceptable inflationary or external pressures. Usually 4% of natural unemployment without cyclical unemployment.
• Define unemployed?


  15+ actively seeking employment
• Define employed?


  15+ working minimum 1 hour a survey week
• Define underemployed?


  Someone employed but working less hours than preferred
• Define hidden unemployment?


  Not actively seeking work / discouraged job seekers
• Define long term unemployment?


  Situation where someones been looking for work for more than 52 weeks
• Define frictional unemployment?


  People moving between jobs in labour market or transitioning in/out of the labour force
• Participation rate?

  Amount of potential labour force actually in the labour force.

  Labour force / working age population
• Unemployment rate?

  % of labour force thats unemployed

  Unemployed / Labour Force
• Define underutilization rate?

  (Unemployed + Underemployed) / Labour force
• Cyclical unemployment?

  Unemployment caused by change in AD.

  If AD decreases, Cyclical Unemployment increases as they wanna protect profit margins
• Natural Unemployment?


  The level of unemployment that does not cause inflationary pressures and not including cyclical unemployment.

  Non Accelerating Inflation Rate of Unemployment (NAIRU) is approximately 4%.
• Why, when unemployment rate increases, participation rate decreases?

  if unemployment rate increases, more workers become discouraged, and leave the labour force, thus decreasing participation rate.